How to Buy a Home in Japan as a Foreigner

Buying a home in Japan as a foreigner is achievable. While the process involves unique considerations, Japan’s legal framework allows for foreign ownership of real estate with few restrictions. This openness, coupled with a stable real estate market, makes property ownership attractive. Navigating the market requires understanding local practices and regulations.

Understanding Eligibility and Property Types

Foreign individuals can purchase both land and buildings in Japan, with no legal restrictions based on nationality, citizenship, or visa status. Even non-residents can acquire real estate. Practical hurdles may arise, particularly concerning financing and administrative procedures. While owning property does not automatically grant residency or a visa, foreigners enjoy the same property rights as Japanese citizens, including the ability to freely buy, sell, and inherit property. A notification requirement exists for non-Japan residents: a report must be submitted to the Minister of Finance through the Bank of Japan within 20 days of acquiring real estate from a Japan resident seller, particularly if for profit.

Residential properties in Japan primarily fall into two categories: “manshon” (condominiums) and “kodate” (detached houses). Manshon are apartment-style units where owners possess their individual unit along with a share of common areas and land. These often include shared amenities and on-site management. Kodate refers to standalone houses, typically with their own plot of land. Freehold ownership, where one owns both the building and the land, is standard for detached homes and land, unlike leasehold arrangements found elsewhere. Initial factors to evaluate include location, proximity to public transport, and purpose of purchase (e.g., primary residence or investment).

Navigating the Property Search and Selection

Engaging a real estate agent is important in Japan. Agents play a comprehensive role, assisting with property listings, arranging viewings, providing negotiation support, and often offering translation services. Agents experienced with foreign clients can simplify the process, as they are familiar with international buyer needs.

Online property portals provide extensive listings for initial research. Understanding common Japanese real estate terminology is beneficial when navigating these sites. During viewings, assess the interior, structural integrity, amenities, and neighborhood, including noise levels. Reviewing floor plans (間取り図) and property reports is essential for understanding the property’s layout and condition.

Securing Financing for Your Home

A cash purchase offers the most straightforward path, bypassing mortgage complexities. For those requiring financing, Japanese bank mortgages are available, though eligibility depends significantly on residency status. Permanent residents are treated similarly to Japanese nationals regarding loan conditions. Long-term visa holders may qualify, but banks scrutinize employment stability, length of stay, and Japanese language proficiency. Non-residents or short-term visa holders are ineligible for domestic mortgages and may need cash purchases or alternative financing from international banks.

Japanese banks offer a maximum loan-to-value (LTV) ratio of around 80% for standard mortgages, requiring a down payment of at least 20%. For non-permanent residents, lenders may require a larger down payment, up to 50%, due to higher risk. Some banks, such as SMBC Trust Bank (Prestia), Shinsei Bank, AEON Bank, and Tokyo Star Bank, offer specialized mortgage products for foreign residents, including those without permanent residency. These may have stricter conditions, such as higher interest rates or shorter repayment periods.

Loan applications involve a pre-approval process where the bank assesses the applicant’s financial situation, including income, employment history (often requiring one to three years of continuous employment), and credit history. Common documents required for a mortgage application include:

Passport
Residence card or visa
Proof of employment
Income statements (such as withholding tax statements)
Recent tax returns
Bank statements showing savings
Proof of address

The Purchase Process and Legal Steps

Once a suitable property is identified and financing is secured, the purchase process begins with an offer.

Making an Offer

This involves submitting a letter of intent (買付証明書 – kaituke shoumeisho), outlining the proposed price and terms. Negotiation of the purchase price and other conditions then takes place between the buyer and seller, often facilitated by their respective real estate agents.

Due Diligence and Explanation

Following offer acceptance, due diligence and property investigation commence. The buyer’s agent or a legal professional conducts checks, including property registration, building permits, zoning regulations, and potential hidden defects. The “Important Matters Explanation” (重要事項説明 – jūyō jikō setsumei), provided by the real estate agent, details all pertinent legal and physical aspects of the property. This explanation is legally mandated before the sales contract is signed, ensuring the buyer is fully informed.

Signing the Contract

The sales contract signing is a formal event where the buyer pays a deposit (手付金 – tetsukekin), typically 5% to 10% of the purchase price, to the seller. The contract specifies terms and conditions, including cancellation clauses and conditions precedent, such as securing final loan approval. This stage legally binds both parties.

Settlement and Transfer

The final stage is settlement and transfer of ownership, usually at a bank or legal office. At this point, the buyer makes the final payment (残金 – zankin), the remaining balance after the deposit. A judicial scrivener (司法書士 – shihōshoshi) handles the transfer of ownership registration (所有権移転登記 – shoyūken iten tōki) at the Legal Affairs Bureau. Once registered and payments confirmed, keys are handed over, completing the acquisition.

Taxes, Fees, and Post-Purchase Considerations

At the time of purchase, the real estate agent’s commission is typically 3% plus 60,000 yen and consumption tax for properties over 4 million yen. Stamp duty (印紙税 – inshizei) is levied on the sales contract, varying from 10,000 JPY to 480,000 JPY based on property price. Registration tax (登録免許税 – tōroku menkyozei) for ownership transfer is typically 1.5% of the assessed value for land and 2.0% for buildings. A 10% consumption tax applies to the building portion of the sale price and brokerage fees, but not to land. Judicial scrivener fees are also incurred for property registration.

A one-time real estate acquisition tax (不動産取得税 – fudōsan shutokuzei) is paid after purchase, typically 3% for residential land and buildings until March 31, 2027, and 4% for non-residential buildings, calculated on assessed value. The bill is usually mailed within six months to a year after purchase.

Ongoing costs include annual property tax (固定資産税 – kotei shisanzei) and city planning tax (都市計画税 – toshi keikakuzei). Property tax is about 1.4% of the assessed property value, while city planning tax can be up to 0.3% in designated urban areas. These are billed in four installments throughout the year. For condominium owners, recurring expenses include management fees (管理費 – kanrihi) for daily operations and repair reserve funds (修繕積立金 – shūzen tsumitatekin) for future large-scale repairs. These fees vary based on the building’s age and amenities, with average combined monthly payments in Tokyo reaching around ¥28,748 in 2025. After purchase, set up utilities such as electricity, gas, and water, and arrange internet services.